Report details depth of Brexit challenges facing DIT

The Department for International Trade is facing a host of difficulties in dealing with the UK’s decision to leave the European Union – with skills gaps and uncertainties over the prospect of a “no-deal” Brexit chief among them, a National Audit Office report has said.

A progress snapshot published today by the public-finance watchdog does not criticise the department, headed by trade secretary Liam Fox from its creation in July 2016, however the words “complex” and “challenging” make frequent appearances.

While the report points to a departmental headcount that has grown from zero to more than 3,700 in 15 months, it also acknowledges that DIT is still getting to grips with the extent of its skills gaps and that meeting its requirements in full will be difficult, and “particularly challenging” in terms of trade negotiators – roles that EU membership made unnecessary in Whitehall for 40 years.

“Trade negotiating skills are scarce in departments and DIT is in competition with other departments for finite staffing resources,” the NAO said.

“To help build the requisite skills, DIT and the Foreign & Commonwealth Office have set up a trade faculty within the FCO’s Diplomatic Academy.”

The report said that most of DIT’s headcount had so far come from other parts of the civil service, but that traditional civil service model of moving staff every few years was “not best suited to building deep sector-specific skills, such as in trade and negotiations skills” .

It said that, as with other specialist areas, there would be a premium on recruiting and retaining staff from outside the civil service.

“This will determine the success or otherwise of the trade profession, particularly in the short term before a sustainable cadre of expertise can be established,” it said.

The report also noted the appointment of chief negotiation adviser and second permanent secretary Crawford Falconer, from New Zealand. Civil service high-earners data published last month reveals that Falconer’s salary band is £100,000 a year more than DIT perm sec Antonia Romeo.

The NAO also noted that DIT had looked at other non-EU countries for guidance on the kind of trade-negotiation capacity it would require in future, and had just launched a workforce capability assessment that would update a skills audit undertaken in 2016.

Elsewhere, the report underscores that one aspect of DIT's Brexit work is challenging in a fundamentally different way to other Whitehall departments in that it has to balance preparing for the UK’s exit point from the EU as well as planning longer term for the negotiation of free-trade agreements.

Today's report said critical paths have been developed for seven of the eight EU workstreams, with the final one expected to be developed this month.

“The plans prepare for two possible EU exit scenarios – a negotiated outcome with transition period and a ‘no deal’ outcome,” it says.

“Delivery of the work streams will be challenging and DIT has put back some of its delivery milestones as the timetable for legislation and the overall negotiation process has moved on.”

Meg Hillier, chair of the House of Commons’ Public Accounts Committee, said she found elements of the NAO snapshot “deeply worrying” particularly in relation to staffing and schedule issues.

“Failure to get the right trade deals in place from day one of Brexit could mean higher prices, lost jobs, and companies going out of business,” she said.

“The department urgently needs to talk to British businesses and work out how to help them secure their future after we leave the EU.”

DIT said its programme plans were on track, and pointed to progress with its Trade Bill – which is now in committee stage.

“We have met every EU exit delivery milestone to date,” a spokesman said. “The NAO report rightly acknowledges the many achievements around our legislation programme, developing capabilities and collaboration work across government.

“We have built an international team of more than 3,700 people, with the right level of capabilities that we need, including recruiting an expert chief trade negotiation adviser with 25 years of experience in trade affairs and negotiations, who leads a team of nearly 500 people in the Trade Policy Group in DIT, as well as the UK’s trade profession across Whitehall.

“We are working closely with other departments across government to ensure we are well prepared for a range of different trade scenarios and to seize the opportunities from an outward-focused global Britain."

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